What’s Next for Proxy Advisors

Proxy advisors were in the spotlight in a few ways this week – and none of them good. Between a scathing report from the Business Roundtable and a hard-hitting House Financial Services Committee hearing, ISS and Glass Lewis were on the back foot. 

What happened: First, the Business Roundtable issued a 22-page report calling the current proxy process “unsustainable,” and making several recommendations for Congress/SEC to: 

Then, House Republicans held a hearing (provocatively titled “Exposing the Proxy Advisory Cartel: How ISS & Glass Lewis Influence Markets”) intended to “shine a light on how the proxy process is functioning and, in many ways, failing today’s markets.”  

Finally, Semafor broke an exclusive story claiming to have insider evidence that Glass Lewis is considering scrapping vote recommendations on certain ballot measures. It’s unclear whether this refers solely to non-financial issues such as ESG shareholder proposals or whether it would apply across the board (seems unlikely). The scoop notes that Glass Lewis would “help investors develop their own custom voting policies, handle the paperwork and regulatory reporting, and provide data and research” and that the change would take several years.  

Never a dull moment: The Center continues to advocate on the Hill and with the SEC for reasonable proxy advisory reform. Amid the turmoil of the next three years, this may be one area where bipartisan support is found for much needed changes to the system.